Friday, July 16, 2010

The following article was reported by Kurt Eichenwald, Gina Kolataand Melody Petersen and was written by Mr. Eichenwald.

In late 1986, four executives of the Monsanto Company, the leaderin agricultural biotechnology, paid a visit to Vice PresidentGeorge Bush at the White House to make an unusual pitch.

Although the Reagan administration had been championingderegulation across multiple industries, Monsanto had a differentidea: the company wanted its new technology, genetically modifiedfood, to be governed by rules issued in Washington and wanted theWhite House to champion the idea.

"There were no products at the time," Leonard Guarraia, a formerMonsanto executive who attended the Bush meeting, recalled in arecent interview. "But we bugged him for regulation. We told himthat we have to be regulated."

Government guidelines, the executives reasoned, would reassure apublic that was growing skittish about the safety of this radicalnew science. Without such controls, they feared, consumers mightbecome so wary they could doom the multibillion-dollar gamble thatthe industry was taking in its efforts to redesign plants usinggenes from other organisms including other species.

In the weeks and months that followed, the White House complied,working behind the scenes to help Monsanto long a political powerwith deep connections in Washington get the regulations that itwanted.

It was an outcome that would be repeated, again and again, throughthree administrations. What Monsanto wished for from Washington,Monsanto and, by extension, the biotechnology industry got. Ifthe company's strategy demanded regulations, rules favored by theindustry were adopted. And when the company abruptly decided thatit needed to throw off the regulations and speed its foods tomarket, the White House quickly ushered through an unusuallygenerous policy of self-policing.

Even longtime Washington hands said that the control this nascentindustry exerted over its own regulatory destiny through theEnvironmental Protection Agency, the Agriculture Department andultimately the Food and Drug Administration was astonishing.

"In this area, the U.S. government agencies have done exactly whatbig agribusiness has asked them to do and told them to do," saidDr. Henry Miller, a senior research fellow at the HooverInstitution, who was responsible for biotechnology issues at theFood and Drug Administration from 1979 to 1994.

The outcome, at least according to some fans of the technology?"Food biotech is dead," Dr. Miller said. "The potential now is aninfinitesimal fraction of what most observers had hoped it wouldbe."While the verdict is surely premature, the industry is in crisis.Genetically modified ingredients may be in more than half ofAmerica's grocery products. But worldwide protest has beengalvanized. The European markets have banned the products and someAmerican food producers are backing away. A recent discovery thatcertain taco shells manufactured by Kraft contained Starlink, amodified corn classified as unfit for human consumption, prompted asweeping recall and did grave harm to the idea that self-regulationwas sufficient. The mighty Monsanto has merged with apharmaceutical company.

How could an industry so successful in controlling its ownregulations end up in such disarray?

The answer pieced together from confidential industry records,court documents and government filings, as well as interviews withcurrent and former officials of industry, government andorganizations opposing the use of bioengineering in food providesa stunning example of how management, with a few miscalculations,can steer an industry headlong into disaster.

For many years, senior executives at Monsanto, the industry'sundisputed leader, believed that they faced enormous obstacles fromenvironmental and consumer groups opposed to the new technology.Rather than fight them, the original Monsanto strategy was to bringin opponents as consultants, hoping their participation would easethe foods' passage from the laboratory to the shopping cart.

"We thought it was at least a decade-long job, to take our effortsand present them to environmental groups and the general public,and gradually win support for this," said Earle Harbison Jr., thepresident and chief operating officer at Monsanto during the late1980's.

But come the early 1990's, the strategy changed. A new managementteam took over at Monsanto, one confident that worries about thenew technology had been thoroughly disproved by science.The go-slow approach was shelved in favor of a strategy to eraseregulatory barriers and shove past the naysayers. The switchinvigorated the opponents of biotechnology and ultimately dismayedthe industry's allies the farmers, agricultural universities andfood companies.

"Somewhere along the line, Monsanto specifically and the industryin general lost the recipe of how we presented our story," saidWill Carpenter, the head of the company's biotechnology strategygroup until 1991. "When you put together arrogance andincompetence, you've got an unbeatable combination. You can getblown up in any direction. And they were."

Biology DebateNew Microbes Bring New Fears

In the summer of 1970, Janet E. Mertz was working at ColdSpring Harbor Laboratory, picking up tips on animal viruses fromDr. Robert Pollack, a professor at the private research center onLong Island and a master in the field. One day she began to explainto Dr. Pollack the experiment she was planning when she returnedto her graduate studies in the fall at Stanford University with heradviser, Dr. Paul Berg. They were preparing to take genes froma monkey virus and put them into a commonly used strain of bacteria,E. coli, as part of an effort to figure out the purposes of differentparts of a gene.

Dr. Pollack was horrified. The virus she planned to use containedgenes that could cause cancer in rodents, he reminded her. Strainsof E. coli live in human intestines. What if the viral genescreated a cancer- causing microbe that could be spread from personto person the way unmodified E. coli can. Dr. Pollack wanted Ms.Mertz's project halted immediately. .

"I said to Janet, `There's a human experiment I don't want to bepart of,' " Dr. Pollack said in a recent interview.

The resulting transcontinental shouting match between Dr. Pollackand Dr. Berg set off a debate among biologists around the world asthey contemplated questions that seemed lifted from sciencefiction. Were genetically modified bacteria superbugs? Would theybe more powerful than naturally occurring bacteria? Wouldscientists who wanted to study them have to move their research tothe sort of secure labs used to study diseases like the blackplague?"The notion of being able to move genes between species was analarming thought," said Alexander Capron, a professor of law andmedicine at the University of Southern California in Los Angeles."People talked about there being species barriers you'rereorganizing nature in some way."

As researchers joined in the debate, they came to the conclusionthat strict controls were needed on such experiments untilscientists understood the implications. In 1975, the elite of thefield gathered at the Asilomar conference center in Pacific Grove,Calif. There, they recommended that all molecular biologistsrefrain from doing certain research and abide by stringentregulations for other experiments. To monitor themselves, they setup a committee at the National Institutes of Health to review andapprove all research projects.

It took just a few years and hundreds of experiments beforethe most urgent questions had their answers. Over and over again,scientists created bacteria with all manner of added or deletedgenes and then mixed them with naturally occurring bacteria.

But rather than creating superbugs, the scientists foundthemselves struggling to keep the engineered bacteria from dying asthe more robust naturally occurring bacteria crowded them out.

It turned out that adding almost any gene to bacteria cells onlyweakened them. They needed coddling in the laboratory to survive.And the E. coli that Ms. Mertz had wanted to use were among thefeeblest of all.

By the mid-1980's, the Institutes of Health lifted itsrestrictions. Even scientists like Dr. Pollack, who sounded theinitial alarm, were satisfied that the experiments were safe.

"The answer came out very clearly," he said. "Putting new genesinto bacteria did not have the unintended consequence of making thebacteria dangerous."

That decision echoed through industry like the sound of astarter's pistol. First out of the gate were the pharmaceuticalcompanies, with a rapid series of experiments on how the newscience could be used in medicines. Hundreds of drugs went intodevelopment, including human insulin for diabetes, Activase for thetreatment of heart attacks, Epogen for renal disease and thehepatitis B vaccine.

"It's been huge," said Dr. David Golde, physician in chief atMemorial Sloan-Kettering Cancer Center in New York. "It has changedhuman health."

The success that modifying living organisms would bring thepharmaceutical industry quickly attracted attention from some ofthe nation's largest agricultural companies, eager to extend theirstaid businesses into an arena that Wall Street had endowed withsuch glamour.

Reaching OutMonsanto Takes a Soft Approach

In June 1986, Mr. Harbison took control of Monsanto's push intobiotechnology, a project snared in mystery and infighting. A19-year veteran of Monsanto who had recently become its presidentand chief operating officer, he formed a committee to lead thecharge.

"There is little more important than this task in our corporationat this time," Mr. Harbison wrote to the 13 executives selected forthe assignment.

"We recognized early on," Mr. Harbison said in a recent interview,"that while developing lifesaving drugs might be greeted withfanfare, monkeying around with plants and food would be greetedwith skepticism." And so Mr. Harbison drafted a plan to reach outto affected groups from environmentalists to farmers to wintheir support.

That same month, the company's lobbying effort for regulationbegan to show its first signs of success. The EnvironmentalProtection Agency, the Department of Agriculture and the Food andDrug Administration were given authority over different aspects ofthe business, from field testing of new ideas to the review of newfoods.

In an administration committed to deregulation, the heads of someagencies had been opposed to new rules. At an early meeting,William Ruckelshaus, then the head of the E.P.A., expressedskepticism that his agency should play any role in regulating fieldtesting, according to people who attended. That was overcome onlywhen Monsanto executives raised the specter of Congressionalhearings about the use of biotechnology to create crops thatcontain their own pesticides, these people said.

By fall, Monsanto's strategy committee was developing a plan forintroducing biotechnology to the public. A copy of a working draft,dated Oct. 13, 1986, listed what the committee considered the majorchallenges: organized opposition among environmental groups,political opportunism by elected officials and lack of knowledgeamong reporters about biotechnology.

It also highlighted more complex issues, including ethicalquestions about "tinkering with the human gene pool" and the lackof economic incentives to transfer the technology to the thirdworld, where it would probably do the most good.

To solve political problems, the document suggested engagingelected officials and regulators around the world, "creatingsupport for biotechnology at the highest U.S. policy levels," andworking to gain endorsements for the technology in the presidentialplatforms of both the Republican and Democratic Parties in the 1988election.

To deal with opponents, the document said, "Active outreach willencourage public interest, consumer and environmental groups todevelop supportive positions on biotechnology, and serve as regularadvisers to Monsanto."

Former Monsanto executives said that while they felt confident ofthe new food's overall safety, they also recognized thatbioengineering raised concerns about possible allergens, unknowntoxins or environmental effects. Beyond that, there was areasonable philosophical anxiety about human manipulation ofnature.

"If this business was going to work, one of the things we had todo was engage in a dialogue with all of the stakeholders, includingthe consumer groups and the more rational environmentalorganizations," said Mr. Carpenter, who headed the biotechnologystrategy group. "It wasn't Nobel Prize thinking."

A BlunderDecision on Milk Causes a Furor

Even as Monsanto was assemblingits outreach strategy, other documents show that it was makingstrides toward what former executives now acknowledge was a majorstrategic blunder. The company was preparing to introduce tofarmers the first product from its biotechnology program: a growthhormone produced in genetically altered bacteria. Some on thestrategy committee pushed for marketing a porcine hormone thatwould produce leaner and bigger hogs.

But, simply because the product was further along in development,the company decided to go forward with a bovine growth hormone,which improves milk production in cows despite vociferousobjections of executives who feared that tinkering with a productconsumed by children would ignite a national outcry.

"It was not a wise choice to go out with that product first," Mr.Harbison acknowledged. "It was a mistake."

Scientists who watched the events remain stunned by Monsanto'sdecisions.

"I don't think they really thought through the whole darn thing,"Dr. Virginia Walbot, a professor of biological sciences at StanfordUniversity, said of Monsanto's decision to market products thatbenefited farmers rather than general consumers. "The way ThomasEdison demonstrated how great electricity was was by providinglights for the first nighttime baseball game. People were in awe.What if he had decided to demonstrate the electric chair instead?And what if his second product had been the electric cattle prod?Would we have electricity today?"

The decision touched off a furor. Jeremy Rifkin, director of theFoundation on Economic Trends, an opponent of biotechnology, joinedwith family-farm groups worried about price declines and otherorganizations in a national campaign to keep the Monsanto hormoneout of the marketplace. Some supermarket chains shunned the idea;several dairy states moved to ban it. The first step toward theshopping cart brought only bad news.

One year later, in 1987, the E.P.A. agreed to allow anothercompany, Advanced Genetic Sciences, to test bioengineered bacteriameant to make plants resistant to frost. But under the agency'sguidelines, it had to declare the so-called ice-minus bacteria anew pesticide classifying frost as the pest.On April 28 and May 28, strawberry and potato plants were sprayedin two California cities. Photographs of scientists in regulationprotective gear spacesuits with respirators were broadcastaround the world, generating widespread alarm.

"It was surreal," said Dr. Steven Lindow, a professor at theUniversity of California at Berkeley, who helped develop thebacteria.

For the executives at Monsanto, these troubling experiencesreinforced their commitment to the strategy of inclusion andpersuasion.

The most complex challenge came in Europe, where there was deepdistrust of the new foods, particularly among politically powerfulfarmers. Faced with such resistance, Mr. Harbison said Monsantobegan subtly shifting its attention from the lucrative Europeanmarket to Asia and Africa. The hope was that the economic realitiesof a global agricultural marketplace would eventually push Europetoward a more conciliatory attitude.

But by the early 1990's, company executives said, everything wouldchange. Mr. Harbison retired. Soon, Monsanto's strategy forbiotechnology was being overseen by Robert Shapiro, the former headof Monsanto's Nutrasweet unit, who in 1990 had been named head ofthe agricultural division.

In no time, former executives said, the strategy inside thecompany began to change. Mr. Shapiro demonstrated a devout sense ofmission about his new responsibilities, these executives said. Herepeatedly expressed his belief that Monsanto could help change theworld by championing bioengineered agriculture, whilesimultaneously turning in stellar financial results.

Eager to get going, he shelved the go-slow strategy ofconsultation and review. Monsanto would now use its influence inWashington to push through a new approach.

Mr. Carpenter, the former head of the company's biotechnologystrategy group, recalled going to a meeting with Mr. Shapiro, andcautioning that it seemed risky to tamper with a strategic approachthat had worked well for the company in the past. But, he said, Mr.Shapiro dismissed his concerns.

"Shapiro ignored the stakeholders and almost insulted them andproceeded to spend all of his political coin trying to dealdirectly with the government on a political basis rather than anopen basis," Mr. Carpenter said.

Mr. Shapiro, now the nonexecutive chairman of the PharmaciaCorporation, which Monsanto merged with last year, declined tocomment. But in an essay published earlier this year by WashingtonUniversity in St. Louis, he acknowledged that Monsanto had sufferedfrom some of the very faults cited now by critics. `We've learnedthat there is often a very fine line between scientific confidenceon the one hand and corporate arrogance on the other," he wrote."It was natural for us to see this as a scientific issue. We didn'tlisten very well to people who insisted that there were relevantethical, religious, cultural, social and economic issues as well."

"The reforms we announce today will speed up and simplify theprocess of bringing better agricultural products, developed throughbiotech, to consumers, food processors and farmers," Mr. Quayletold a crowd of executives and reporters in the Indian Treaty Roomof the Old Executive Office Building. "We will ensure that biotechproducts will receive the same oversight as other products, insteadof being hampered by unnecessary regulation."

With dozens of new grocery products waiting in the wings, the newpolicy strictly limited the regulatory reach of the F.D.A, whichhad oversight responsibility for foods headed to market.

The announcement a salvo in the Bush administration's"regulatory relief" program was in lock step with the newposition of industry that science had proved safety concerns to bebaseless.

"We will not compromise safety one bit," Mr. Quayle told hisaudience.

In the F.D.A.'s nearby offices, not everyone was so sure.

Among them was Dr. Louis J. Pribyl, one of 17 government scientistsworking on a policy for genetically engineered food. Dr. Pribylknew from studies that toxins could be unintentionally created whennew genes were introduced into a plant's cells. But under the newedict, the government was dismissing that risk and any otherpossible risk as no different from those of conventionally derivedfood. That meant biotechnology companies would not need governmentapproval to sell the foods they were developing.

"This is the industry's pet idea, namely that there are nounintended effects that will raise the F.D.A.'s level of concern,"Dr. Pribyl wrote in a fiery memo to the F.D.A. scientist overseeingthe policy's development. "But time and time again, there is nodata to back up their contention."

Dr. Pribyl, a microbiologist, was not alone at the agency. Dr.Gerald Guest, director of the center of veterinary medicine, wrotethat he and other scientists at the center had concluded there was"ample scientific justification" to require tests and a governmentreview of each genetically engineered food before it was sold.

The scientists were displaying precisely the concerns thatMonsanto executives from the 1980's had anticipated and indeedhad considered reasonable. But now, rather than trying to addressthose concerns, Monsanto, the industry and official Washington weredismissing them as the insignificant worries of the uninformed.Under the final F.D.A. policy that the White House helped usher in,the new foods would be tested only if companies did it. Labelingwas ruled out as potentially misleading to the consumer, since itmight suggest that there was reason for concern.

"Monsanto forgot who their client was," said Thomas N. Urban,retired chairman and chief executive of Pioneer Hi-BredInternational, a seed company. "If they had realized their clientwas the final consumer they should have embraced labeling. Theyshould have said, `We're for it.' They should have said, `We insistthat food be labeled.' They should have said, `I'm the consumer'sfriend here.' There was some risk. But the risk was a hell of a lotless."

Even some who presumably benefited directly from the new policyremain surprised that it was adopted. "How could you argue againstlabeling?" said Roger Salquist, the former chief executive ofCalgene, whose Flavr Savr tomato, engineered for slower spoilage,was the first fruit of biotechnology to reach the grocery store."The public trust has not been nurtured," he added.

In fact, the F.D.A. policy was just what the small band ofactivists opposed to biotechnology needed to rally powerful globalsupport to their cause.

"That was the turning point," said Jeremy Rifkin, the author andactivist who in 1992 had already spent more than a decade trying tostop biotechnology experiments. Immediately after Vice PresidentQuayle announced the F.D.A.'s new policy, Mr. Rifkin began callingfor a global moratorium on biotechnology as part of an effort thathe and others named the "pure food campaign."

He quickly began spreading the word to small activist groupsaround the world that the United States had decided to let thebiotechnology industry put the foods on store shelves without testsor labels. Mr. Rifkin said that he got support from dozens of smallfarming, consumer and animal rights groups in more than 30countries. In Europe, these small groups helped turn the publicagainst genetically altered foods, tearing up farm fields andholding protests before television cameras.

If the F.D.A. had required tests and labels, Mr. Rifkin said, "itwould have been more difficult for us to mobilize the opposition."

Today, the handful of nonprofit groups that joined Mr. Rifkin's inlobbying the F.D.A. for stronger regulation in 1992 have multipliedto 54. Those groups, including the Sierra Club, Friends of theEarth, the Natural Resources Defense Council, Public Citizen andthe Humane Society of the United States, signed a petition thisspring demanding that the government take genetically engineeredfoods off the market until they are tested and labeled.

"There is absolutely no question that the voluntary nature of thepolicy was unacceptable to many," said Andrew Kimbrell, one of theearly activists to oppose biotechnology and now the executivedirector of the Center for Food Safety, which filed the petition.

The F.D.A. policy has also helped organizations like Mr.Kimbrell's raise money. In late 1998 groups opposed tobiotechnology approached the hundreds of foundations that giveregularly to environmental causes and told them about thegovernment's decision to let the companies regulate themselves.Since then, the foundations have given the groups several milliondollars out of concern over the policy, said Christina Desser, alawyer in San Francisco involved in the fund-raising effort.

There was also an about-face in the approach to dealing withoverseas markets. As the Clinton administration came to Washington,Monsanto maintained its close ties to policy makers particularlyto trade negotiators. For example, Mr. Shapiro was friends withMickey Kantor, the United States trade negotiator who wouldeventually be named a Monsanto director.

Confrontation in trade negotiations became the order of the day.Senior administration officials publicly disparaged the concerns ofEuropean consumers as the products of conservative minds unfamiliarwith the science.

"You can't put a gun to their head," Mr. Harbison said of thetoughened trade strategy with Europe. "It just won't sell."

And it didn't. Protests erupted in Europe, and geneticallymodified foods became the rallying point of a vast politicalopposition. Exports of the foods slowed to a stop. With a vocal andpowerful opposition growing in both Europe and America, theperceived promise of biotechnology foods began to slip away.

By the end of the decade, the magnitude of Monsanto's error inabandoning its slow, velvet-glove strategy of the 1980's wasapparent. Mr. Shapiro himself acknowledged as much. In the fall of1999, he appeared at a conference sponsored by Greenpeace, theenvironmental group and major biotechnology critic.

There, while declaring his faith in biotechnology, Mr. Shapiroacknowledged that his company was guilty of "condescension orindeed arrogance" in its efforts to promote the new foods. But itwas too late for a recovery. Soon after that speech, with thecompany's stock price in the doldrums because of its struggles withagricultural biotechnology, Monsanto itself ended its existence asan independent company. It was taken over by Pharmacia, a NewJersey drug company.

In recent months, biotechnology has been struggling with theconsequences of its blunders. Leading food companies like Frito-Layand Gerber have said they will avoid certain bioengineered food.And grain companies like Archer Daniels Midland and Cargill haveasked farmers to separate their genetically modified foods fromtheir traditional ones. That, in turn, creates complex, costly andas the Starlink fiasco shows at times flawed logisticalrequirements for farmers.

Efforts have been made by industry and government to assuagepublic concerns although critics of the technology maintain thatthe attempts do not go far enough. Last week, the F.D.A. announcedproposed rule changes requiring the submission of certaininformation that used to be provided voluntarily. But evensupporters of the rule change say that it will make littlepractical difference in the way the business works, since companieshave universally submitted all such information in the past, evenunder the voluntary standard.

And the industry itself has started down a new path, with amultimillion-dollar advertising campaign promoting geneticallyengineered foods as safe products that provide enormous benefits topopulations around the world an effort that some food industryofficials say has come 10 years too late.

"For the price of what it would have cost to market a newbreakfast cereal, the biotech industry probably could have saveditself a lot of the struggle that it is going through today," saidGene Grabowski, a spokesman with the Grocery Manufacturers ofAmerica, a trade group.

And in recent weeks, Monsanto itself has announced plans to charta new course one with striking similarity to the course abandonedin 1992 reviving its outside consultations with environmental,consumer and other groups with concerns or interest in thetechnology.

For the corporate veterans who set the original strategy, this isscant solace. A dream they had worked so hard to achieve had, atthe very least, been set back by years.

"You can't imagine how I have bled over this," said Mr. Carpenter,the former head of biotechnology strategy for Monsanto. "They lostthe battle for the public trust."